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UK government calls for security review of graphene firm’s takeover by Chinese academic

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Key Points
  • British Business Secretary Kwasi Kwarteng has ordered the U.K. competition watchdog to complete a national security review into the takeover of Perpetuus Group by Taurus International or Zhongfu Zhou, or any enterprise associated with him or the company.
  • Zhou is the managing director of the Inner Mongolia Industrial Research Institute for Composite Materials, a company based in northern China, according to his LinkedIn page.
  • Graphene is a one-atom thick material that could revolutionize products in everything from computing to defense.
Vincenzo Lombardo | Photographer's Choice | Getty Images

The U.K. government has called for an investigation into a takeover by a Chinese scientist of a small Welsh manufacturer that makes a "supermaterial" known as graphene.

British Business Secretary Kwasi Kwarteng has ordered the U.K. competition watchdog to complete a national security review into the takeover of Perpetuus Group by Taurus International or Zhongfu Zhou, or any enterprise associated with him or the company.

The Competition and Markets Authority has been given until Feb. 7 to submit a report to the government, which issued a public interest intervention notice to intervene in the proposed transaction.

The U.K. government declined to comment on the specific reasons behind the intervention.

Zhou is listed as the chief nanotechnology scientist on the Perpetuus website, which says he is one of the world's leading authorities on 2D materials and their applications.

The scientist has spent several years studying advanced materials like graphene, which is a one-atom thick material that could revolutionize products in everything from computing to defense.

After graduating from the University of Science and Technology in Beijing, he went on to study a PhD in materials science at Oxford University and then became a research associate at Cardiff University in Wales.

He then moved to Aberystwyth University in 2010 to work for the Department of Physics and the Centre for Advanced Functional Materials and Devices, with his contract coming to an end last year.

He is the managing director of the Inner Mongolia Industrial Research Institute for Composite Materials, a company based in northern China, according to his LinkedIn page.

Founded in 2013, Perpetuus had a turnover of £479,001 in 2020, down from £717,681 in 2019, according to documents filed with U.K. companies' registry Companies House. In 2019, it had 14 staff.

Meanwhile, Taurus International was founded in Oct. 2020 and its office is registered to a semi-detached residential property in southeast London. It has one director listed on its company accounts.

"I'm pleased to see the government being more active in responding to national security concerns over takeovers," said British lawmaker Tom Tugendhat, who leads the China Research Group, which aims to "promote debate and fresh thinking" about how Britain should respond to the rise of China, according to its website.

"Graphene, like many other U.K. innovations, offers the possibility of an extraordinary future and it's essential that sensitive technology stays with trusted partners," Tugendhat added.

Perpetuus and Zhou did not immediately respond to a CNBC request for comment.

The intervention comes just a few months after the U.K. government ordered a national security review of another Chinese takeover.

Nexperia, a Dutch semiconductor manufacturer that owned by China's Wingtech, purchased the U.K.'s largest chip plant, Newport Wafer Fab, for £63 million in July.